Shifts in the AD and AS curves and Equilibriums_CFA考试视频

A decrease in AD lowers real GDP:contractions are associated with rising inflation and interest rates.

Shifts in the AD and AS curves can cause changes in the equilibrium level of output and prices in an economy.

1. AD Curve Shifts:

a. Increase in AD: When there is an increase in aggregate demand, the AD curve shifts to the right. This results in an increase in both the equilibrium level of output and prices.

b. Decrease in AD: When there is a decrease in aggregate demand, the AD curve shifts to the left. This results in a decrease in both the equilibrium level of output and prices.

2. AS Curve Shifts:

a. Increase in AS: When there is an increase in aggregate supply, the AS curve shifts to the right. This results in a decrease in the equilibrium level of prices and an increase in the equilibrium level of output.

b. Decrease in AS: When there is a decrease in aggregate supply, the AS curve shifts to the left. This results in an increase in the equilibrium level of prices and a decrease in the equilibrium level of output.

Overall, the equilibrium level of output and prices in an economy is determined by the intersection of the AD and AS curves. Any shifts in these curves can cause changes in the equilibrium level of output and prices.